Free trade talks between EU and Africa in limbo due to apparel exports from Asia.

There is growing friction from African textile markers towards their Asian counter parts over their growing trade talks with the EU (European Union) .

Kenyan textile producers face stiffer competition in their search for an alternative market as the low-cost Asian producers push for free trade arrangements with the European Union.

Pakistan and India are presently in talks to initiate a free trade area (FTA) with the European Union that would grant their firms easy access to the EU market.

The FTAs with Asian countries are expected to lower the tariffs further, raising the level of Asian exports into the EU market.

"While cheaper textiles from China, India and other Asian countries have squeezed our markets in US, we still prefer the market because of its protective tariffs," says Mr Jaswinder Bedi, chairman of Textile Manufacturers Association of Kenya.

Statistics from the African Cotton and Textile Industries Federation put the volume of Africa’s textile exports at Sh130.9 billion ($1.7bn), less than one per cent of the global textile sales.

More than 90 per cent of the African textile exports go to the US --a market which has since been opened to low cost Asian textiles following the expiry of the 2005 expiry Multi Fibre Agreement (MFA) --a legal instrument that once spread a blanket of protection against influx of developing countries’ products.

Compared to the American market which maintains higher tariff walls of between 16 and 32 per cent on textile products from countries with which it maintains non preferential trade agreements, EU’s external tariffs on textiles range from 8 to 14 per cent.

"To an African producer, EU is a very expensive market to penetrate because it requires heavy expenditure on promotion while most firms have also complained of its cumbersome entry rules," Mr Joseph Kosure, the acting CEO of Kenya’s Export Processing Authority told the Business Daily on Thursday.

Taking a cue from the successful enactment of the African Growth and Opportunity Act (Agoa) which opened the American market for African textile in 2000, the EU included in the EPAs apparel and textile in the list of items that would enter its market duty-and-quota-free.

But ten years since EPAs talks were initiated, African textile players maintain that lower external tariffs that EU extends to other regions have let in textile from low-cost countries.

What ones takes away from this is that the "China price" is hard to beat. Efficiency and productivity are what has driven Asian countries like Vietnam, Thailand, Indonesia and of course, China to rapid economic expansion and growth.

The only remedy for Kenya  and African exports is to increase the presence-market share in the US and develop niche markets, segments that will enable them to avoid direct competition from Asian exports were there at a price disadvantage, not a quality one.

Agoa's New Policy Under Obama Administration

Agoa's architects unveil new policy under Obama administration:

Ten years after the enactment of the African Growth and Opportunity Act (AGOA), a coalition of its original architects and supporters on Monday unveiled a comprehensive new trade and economic policy to be presented to the Obama Administration that would build on AGOA's successes and expand the growing trade relationship between Africa and the United States.

The new policy proposal, entitled Enterprise for Development: A New Policy Approach Toward Africa, calls for the continuation of AGOA's exclusive duty- and quota-free access to the US market for African goods, as well as policies to strengthen and grow indigenous enterprises in Africa and measures that support job creation, export promotion and prosperity in both the US and Africa.

At an AGOA Leaders Forum in Washington, DC, hosted by a coalition of AGOA's US supporters, and attended by African Ministers of Finance and Ambassadors, as well as other AGOA stakeholders and business and policy leaders, Ms. Rosa Whitaker, chair of the AGOA Action Committee and President and CEO of The Whitaker Group, the premier US trade consultancy facilitating trade between the US and Africa, hailed the success of AGOA over the past decade in creating more than 300,000 jobs in Africa and bringing about $300 billion in export earnings and nearly $30 billion in non-oil exports to Africa at a minimal cost to US taxpayers.

"Over the past decade, we have learned that AGOA should be just one tool – albeit a critical one - in America's arsenal to support Africa as it grows its own prosperity. We have learned that what Africa needs from the United States is a concerted, multifaceted trade and investment policy that brings together the trade preferences of AGOA with trade capacity building, strategic development assistance and incentives to spur greater foreign direct investment by U.S. businesses in Africa," she said.

Mr. Thahane emphasized that Africans are not saying that the US Congress should not grant special trade preferences to LDCs in Asia, but that legislators should provide preferences that would help struggling sectors in those countries, rather than benefit sectors that are already successful. "Preferences for Bangladesh and Cambodia should not be at the expense of sub-Saharan Africa," he said...

Even without duty-free and quota-free access to the US market, Bangladesh and Cambodia export over $5 billion in apparel each year to the United States – more than five times the total of all clothing exported to the US by all 48 SSA countries combined.

The minister also pointed out that unlike Bangladesh and Cambodia, both of which have agricultural resources, resource-poor Lesotho, Africa's top apparel exporter, has few other alternatives. "Extending preferences to these countries might kill that industry that started in Lesotho 10 years ago," he said. "Let us look at AGOA in an open and strategic manner. There are people [in Africa] who have been making a living out of access to the US."

"AGOA has demonstrated that if we have the market opportunities, Africa can respond, it can produce, it can deliver. Give us a break and we can deliver," Mr. Thahane added. "African governments are trying to reach larger markets through regional integration, but we have to have the infrastructure and we also need the skills. The entry point has been AGOA and let us not dilute it, let us expand it and make it global."

Dr. Collier described AGOA as so successful that it should be replicated by the European Union and Japan. "There is a real opportunity for AGOA to go global. If we had a Super AGOA that included Europe and Japan, it would make life so much easier for Africa," he said, describing the trade preferences offered by AGOA as the "pump priming mechanisms" that are helping African nations to break into manufacturing and the global market.

"We know where trade preferences should go, and where they should be kept out," he said. "If we give them to one huge manufacturer [like Bangladesh], it would cut out all the little manufacturers. These big manufacturers must be kept out because they are not entrants into manufacturing. Bangladesh doesn't need privileged access. There are many ways to help Bangladesh because it is still poor but [giving preferential trade access to its apparel sector] is not the way to do it."

The proposals that were recommended were to include:

• Making AGOA permanent and exclusive to Africa and expanding duty- and quota-free access to more African products.


• Extending tax incentives and credits for US investors in Africa, and supporting regional integration through AGOA.


• Developing an effective plan to work with African nations to revitalize the region's agricultural sector, support local processing and value-addition for Africa's agricultural products, support increased sourcing of African agricultural products from initiatives such as the World Food Program and support technology transfers, technical assistance and assistance to African agricultural exporters to meet US sanitary and phyto-sanitary requirements, and boost overall US support for a Green Revolution in African agriculture.


• Reform the US foreign aid program to focus more on trade capacity-building initiatives, extending loans to African businesses in the same way that the Marshall Plan rebuilt Europe's business sector following World War Two, and supporting regional development and energy and infrastructure development in Africa.


• Expanding and reforming the Millennium Challenge Corporation (MCC) so that it focuses its resources on building African energy and transportation sectors and gives top priority bidding to US and African companies and procurement projects.


• Increasing financing for US exports to Africa through the US Export-Import Bank.


• Increasing support to the Overseas Private Investment Corporation (OPIC) to enable it to support African equity and infrastructure funds, increase assistance to small- and medium-sized companies in Africa, and more funding for the African Technical Assistance Initiative.

Africa growth potential similiar to India?

Africa resembles Indian economic growth potential according to Indian billionaire Sunil Bharti Mittal

In Africa, Bharti Airtel Ltd. appears determined to wade into a market loaded with poverty, promise and major legal tussles—just like home in India.

Bharti, headed by Indian billionaire Sunil Bharti Mittal, has seized on a potential $9 billion deal with Kuwait's Zain, or Mobile Telecommunications Co., that, if completed, would catapult the company into the ranks of major telecom operators in Africa. Combined with operations in India, Bharti would have significant footholds in two continental markets. The deal would include the assumption of $1.7 billion in debt.

Associated PressNigeria is Africa's largest cellphone market. Above, a man uses a gasoline generator to charge mobile-phone batteries for a fee in Lagos.

Bharti isn't the only telecom operator eager for a piece of Africa. On Tuesday, a consortium involving China Unicom (Hong Kong) Ltd. bid $2.5 billion for the former state telecoms monopoly in Nigeria, according to the National Council on Privatization. The government privatization body said that the China Unicom-led consortium outbid four other contenders by more than $1.5 billion for Nigerian Telecommunications Ltd., or NITEL...

Bharti's bid also comes at a time when new undersea cables are reaching Africa, connecting the continent to the rest of the world.

"Zain's operations in Africa will always be attractive because of their footprint there," says Badii Kechiche, a senior analyst in London at Pyramid Research.

The talks mark the third attempt by Bharti's Mr. Mittal to gain a foothold in Africa, the world's poorest continent but with a population of about one billion and home to several fast-moving economies.

For global telecom companies, Africa offers strong growth potential. Cellphone penetration rates remain among the lowest anywhere. Zain has close to 42 million customers in the 15 countries the deal will include, with most markets having shown double-digit subscriber growth in recent years. There's room to grow: Cellphone penetration in these markets averages less than 40%, according to data from industry researchers Onda Analytics.

For Bharti, coming to Africa may seem like a coming home. Like Africa, India boasts high subscriber growth rates and large rural populations with little fixed-line infrastructure. There are common aspirations for owning a mobile phone, both as a tool for business and as a means to contact far-flung family members. And with growth has come aggressive competition.

Nigeria perhaps best highlights the potential pitfalls Bharti may face in entering the African market. With a population of nearly 150 million people and over 70 million GSM subscribers, Nigeria is Africa's largest mobile market...

In another sizable market, Kenya, Zain has similarly hit competitive headwinds. In the third quarter of 2009, Zain's market share was static at 17%.

Tata Motor sets sights on Africa.

At the recent Geneva Auto Show Tata motors state their deepening view on the African car market.

The Tata booth at the International Motor Show in Geneva stands out, and that's quite an accomplishment given it's sitting next to the high-shine polish of an Aston Martin and the leggy models posing alongside Lamborghini's station.

The Tata booth, like its automotive products, is scaled down. No glitz and no girls. Instead, India's top vehicle maker by revenue has two cars of note on display: a concept electric Nano and the Aria, a crossover with the frame of a small SUV and the curvature of a Minivan. Neither are necessarily sexy or powerful -- or any of the other Geneva Motor Show buzzwords....

"We're expanding in our 16 markets outside of India," said Abhay Deshpande, Tata's deputy general manager, in charge of vehicle integration with the Nano. "The Middle East, Africa and southern Asia are all very strong." When every other car manufacturer is drooling over the Chinese market, Mr. Deshpande says they're expanding in Africa instead.

"We're the number one brand in Ghana and have a strong market in South Africa and Senegal," Mr. Deshpande said.

Tata also just launched in Nigeria and Tanzania. By focusing on growth outside the traditional markets of Europe, Asia and North America, Tata wants to build brand allegiance in these areas before they become mainstream....

That's not to say they're ignoring Europe and the U.S. "The Aria and Nano are good for Europe and I think they will work in America, too," Mr. Deshpande said.

In the emerging markets, the Nano is priced at around $2,500.

Obama's lean toward economic connectivity over democracy: a very smart strategy?

Once again I find myself in complete agreement with the Obama administration's focus on economic connectivity and its prioritization relative to the democracy agenda:

After the imprisonment of Egyptian opposition leader Ayman Nour in 2005, the Bush administration suspended plans for free-trade agreements with Egypt. The Obama administration has now effectively reversed this policy just ahead of Egypt's May parliamentary elections.

During a March 21-23 visit to Egypt, US Trade Representative Ron Kirk said the United States hoped to double trade with Egypt over five years. In a departure not only from President George W. Bush's approach to the Middle East, but also a break with President Barack Obama's speech in Cairo last year, Kirk omitted any linkage to "freedom" and "human rights."

Kirk instead said that Washington's commitment to freedom, democracy, and human rights make the US "an even more attractive environment for investment and partnership." He added that the "partnership between the United States and Egypt in promoting peace and stability in the Middle East is a great foundation on which to build a much stronger economic and commercial relationship."

The Obama administration also seeks to import more goods from so-called Qualified Industrial Zones (QIZs).

These operate under an arrangement according to which goods made in designated industrial areas in Egypt and Jordan, using Israeli inputs, gain duty-free access to the US market.

"We believe [that importing more goods] serves the United States' interest for the reasons that the QIZs were initially put in place, and that it helps provide stability when people have access to gainful employment," Kirk explained.

Nothing will make the Egyptian people more willing to ditch Mubarak's "emergency rule" than rising incomes, a growing economy, and a widespread sense of self-mastery.

Side note: In 2009, exports to Egypt totaled $5.3 billion. The top export categories in 2009 were: machinery, aircraft, cereals (corn and wheat), mineral fuel and oil, and miscellaneous grain, seed and fruit (soybeans). Top U.S. exports of agricultural products in 2008 totaled $2.1 billion, the 8th largest U.S. agriculture export market. Leading categories include: wheat, coarse grains and soybeans.(Office of US Trade Representative)

US Investment and Trade in Africa

Here is US Trade Representative talking about US-Africa Trade.

Africa, the new emerging market(s)

Ugandan Rumbles Onwards

Uganda is on the come up. The progress that has been made has been substantial, especially in the Health and energy sector.  The country is getting tough with Oil companies that might damage long term growth in Oil exploration.

The government of Uganda has threatened to throw out rivaling oil companies in the country if their disagreements threaten the exploration of oil in the country.......

The oil resources in Uganda and indeed all other mineral resources belong to the people of Uganda, and government as the custodian of these resources has a duty to ensure that they are harnessed and developed for the benefit of its people”, the minister said.

“If the two companies disagreed, it will not have an impact on the government. If they squabble among themselves, or quarrel, I will not hesitate to invoke their license in the oil exploration. If they become a nuisance or involved in courts, I will throw them out. We cannot allow the delay in the oil exploration”, he said.

He added that “we cannot allow a monopoly situation by one company in the Albnertine Graben.

A trade show recently opened between it and Sudan.

The first ever trade show exhibition involving traders, businessmen and industrialists from Uganda and southren Sudan is to be held starting on Wednseday in the southern Sudan capital of Juba.

The two day trade show, according to south Sudan trade ministry official, Albert Lukudu, is an outcome of improved trade ties between the two countries and better business infrastructure in southern Sudan.

The pilot exhibition is for businessmen from both countries to link up and resolve business challenges.

Addressing the press in Juba, the Acting Consul General of Uganda, Habib Migadde said, "This is the first time a joint exhibition involving businessmen from Uganda and southern Sudan is taking place. That is good for the two countries. It is an ideal way for business professionals to discuss and find solutions in business registration and taxation issues."

Migadde added that the exhibition is a way to deal with price fluctuations and to cut out the middle man.

This could ease tensions in Northern Uganda and Southern Sudan.  Not only that, the East Africa region is enjoying traded like never before.

Nations of eastern and southern Africa have been working for most of this decade to build an alliance to strengthen their position as an economic and trading force. They recognize that good governance and consistent policies throughout their region will create a better atmosphere for business and trade. An improved business climate will provide their people greater opportunities for jobs and prosperity.

Neighboring nations of the world are teaming up in regional trade groups, improving access to regional markets, and strengthening their economic integration. By committing the partners to clear and enforceable rules, these organizations promote transparency and good governance. The trend is marked by a string of acronyms stretching across the globe—APEC, Asia-Pacific Economic Cooperation; ASEAN, the Association of Southeast Asian Nations; NAFTA, the North American Free Trade Agreement; and, of course, the world’s most advanced regional market, decades in the making, the EU, the European Union.

Now, here comes COMESA, the Common Market for Eastern and Southern Africa.

COMESA has 19 member countries: Burundi, Comoros, Congo Democratic Republic, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia, and Zimbabwe. Fourteen of these states are already in a free trade area.

Trade development among our member nations is the cornerstone of our agenda, and we have pursued a variety of steps to liberalize and facilitate trade throughout our region in a process that economists call “integration.” We also have a vision for our relationship to lead to a common market and achieve monetary union, following the same course as the Europeans.

The COMESA Free Trade Area [FTA] gives us a type of trade bloc in which our countries have agreed to eliminate tariffs and quotas when we trade among ourselves. The next step for us in this process of economic integration will be to form a “customs union,” whereby we retain our free trade arrangements but also adopt a common policy for an external tariff imposed on goods imported from nonmember nations.

Trade in the region will improve for example

today goods being imported from Japan to Rwanda pass under the eyes of border officials at multiple points—as they are off-loaded from a ship at Mombasa, Kenya; when they pass overland from Kenya into Uganda; then again, as they pass the national border into neighboring Rwanda. They receive a final inspection from officials in Kigali. Under the Customs Union, the goods will simply be inspected and cleared only once in Mombasa. We believe reduced inspections for goods will benefit both business and the consumer, streamlining trade, reducing costs, and eliminating opportunities for corruption that can arise at each inspection point.

With a regional population of 400 million and a gross domestic product of almost US $420 billion, ours is an attractive region for investment and trade in this globalized world.

The 2009 economic crisis did not affect the country.

In his first address to a special sitting of the East African Legislative Assembly in Kampala Tuesday, President Museveni noted that the Ugandan economy had earned over 1.6 billion dollars from regional trade during the last financial year............The widening cross border trade between Uganda, Southern Sudan, Eastern Congo, and Central African Republic had great benefits for the Ugandan economy Even during the recent economic crisis did not affect Uganda very much because of the regional trade," said the Ugandan President.

Mr. Museveni has reaffirmed the need to lower cost of production and doing business in order to lure more investors to the East African Region. He said there is need to pay attention to development of physical infrastructure like roads, railways and improvements in electricity power generation.

More on President Museveni talking about trade and what the region needs.